I'm not familiar with paypal or how it handles issues,

setting aside "the gift" thing that I don't understand,

if Mac was resolute that he did not ship a compass with a bubble and for whatever reason the bubble formed between the time he packaged it and Pal received it - lets say the UPS man punted it across the truck - if Paypal demands that Pal follow up with the damage claim for insurance or whatever, then I don't see the big deal in Mac asking Pal to contact Paypal and at least attempt to solve it thru them - with the caveat that if he doesn't get satisfaction from Paypal, he'll immediately refund the money.

I know that isn't how this played out from what I've read, but it seems it tried to go that way for a brief period of time.

I would hate to be out $74 because the UPS man dropped a box of hammers on my compass I shipped if there was recourse with insurance.

have you paid your dues, can you moan the blues, can you bend them guitar strings